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# Please Rate my first AWA so I can further improve

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Intern
Joined: 06 Aug 2019
Posts: 2

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06 Aug 2019, 10:20
1
Prompt:

The following appeared in a corporate memorandum of a beverage manufacturer:

“Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company’s profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm.”

My Response:

The corporate memorandum of a beverage manufacturer claiming that similar price reductions should be offered on all drinks because it was highly successful for its energy drinks, and it will lead to improved profitability and enhance its perception in the eyes of consumers is seriously flawed.

While surveys show that the promotional price on energy drinks was well received by the majority of its customers, there is no information about survey results for the other drinks. By failing to do this, the reader cannot fully establish if each consumer group's preferences are comparable, and therefore cannot provide a blanket statement amongst the different groups. For instance, if another drink that the firm manufactures is Kombucha, which can generally be thought of as a more premium drink, a price promotion could be detrimental to the overall success of the drink offering because with premium products, consumers sometimes associate price with quality, meaning a higher price equals a higher quality drink. So, before making a statement, such as price reductions should be offered on all drinks produced by the firm to enhance its perception, the company's argument would strengthen if they could show a similar target consumer between energy drinks and all of the other drink offerings.

So now, if we assume that overall perception has increased based on price reductions, we are still not sure if it will improve the company's profitability. When a company reduces prices, it has to increase the volume that it will sell, in order to realize a higher profit. Without specific numbers on sales it is hard to determine whether the "dramatic increase in unit sales" is enough to increase profitability versus the status quo. There is also no information about the current product pricing. For example, some products could already be priced at a break-even amount, which would mean if prices dropped any lower, then the company would be losing money on each sale. In order to justify the basis of increased profitability more information is needed on the company's current product sales volume and cost structure.

Based on the limited information in the memorandum provided, we cannot assume that a price reduction will be in the company's best interest without further analyzing its consumer base and its cost structure of product offerings.
Sloan MIT School Moderator
Joined: 17 Jul 2018
Posts: 958
Re: Please Rate my first AWA so I can further improve  [#permalink]

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10 Aug 2019, 11:51
gchong wrote:
Prompt:

The following appeared in a corporate memorandum of a beverage manufacturer:

“Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company’s profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm.”

My Response:

The corporate memorandum of a beverage manufacturer claiming that similar price reductions should be offered on all drinks because it was highly successful for its energy drinks, and it will lead to improved profitability and enhance its perception in the eyes of consumers is seriously flawed.

While surveys show that the promotional price on energy drinks was well received by the majority of its customers, there is no information about survey results for the other drinks. By failing to do this, the reader cannot fully establish if each consumer group's preferences are comparable, and therefore cannot provide a blanket statement amongst the different groups. For instance, if another drink that the firm manufactures is Kombucha, which can generally be thought of as a more premium drink, a price promotion could be detrimental to the overall success of the drink offering because with premium products, consumers sometimes associate price with quality, meaning a higher price equals a higher quality drink. So, before making a statement, such as price reductions should be offered on all drinks produced by the firm to enhance its perception, the company's argument would strengthen if they could show a similar target consumer between energy drinks and all of the other drink offerings.

So now, if we assume that overall perception has increased based on price reductions, we are still not sure if it will improve the company's profitability. When a company reduces prices, it has to increase the volume that it will sell, in order to realize a higher profit. Without specific numbers on sales it is hard to determine whether the "dramatic increase in unit sales" is enough to increase profitability versus the status quo. There is also no information about the current product pricing. For example, some products could already be priced at a break-even amount, which would mean if prices dropped any lower, then the company would be losing money on each sale. In order to justify the basis of increased profitability more information is needed on the company's current product sales volume and cost structure.

Based on the limited information in the memorandum provided, we cannot assume that a price reduction will be in the company's best interest without further analyzing its consumer base and its cost structure of product offerings.

Please do not use that template, that will barely get you a 3
Try this style
Go above 500 words anyhow
Look for an AWA, you must follow template by chineseburned

Para 1 Paraphrasing
Para 2 Flaw 1
Para 3 Flaw 2
Para 4 Flaw 3
Para 5 Summarise with suggestions

Try this style and tag me
I'll suggest if that needs improvement. Just following a template can get you a 5.
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Manager
Joined: 05 Mar 2017
Posts: 205
Location: India
Concentration: General Management, Marketing
GPA: 3.6
WE: Marketing (Hospitality and Tourism)
Re: Please Rate my first AWA so I can further improve  [#permalink]

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15 Aug 2019, 23:08
Hey, I would recommend using the Chinese burned format.
Re: Please Rate my first AWA so I can further improve   [#permalink] 15 Aug 2019, 23:08